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Texas Bankruptcy - Creditor's Rights in Bankruptcy

If you are a creditor in a Texas Business Bankruptcy proceeding under Chapter 7 or Chapter 11 you need to know you have rights to preserve in order to maximize the potential recovery of your claim. Just because a Debtor has filed for bankruptcy does not mean you will automatically not receive anything at all. Depending on the facts leading up to the filing as well as the type of Bankruptcy chapter filed, you may be able to recover all or part of your claim. It is also possible to receive absolutely nothing, but the only way to know is to review the schedules and information contained in the petition and exercise your rights accordingly.

Once a Business Bankruptcy Creditor receives notice of the Bankruptcy filing it is extremely important to cease and desist any and all collection actions, which also includes contact with the debtor in any form. All contact if any should be only through the debtor’s attorney with absolutely no exceptions. Business Bankruptcy Creditors must stop telephone calls, billing or invoicing, lawsuits that may be pending against the debtor, and any other contact which could be construed as a violation of the automatic stay 11 U.S.C.362 which protects the debtor and its property from all forms of collection or legal actions during the pendency of the Bankruptcy case or until the stay is lifted.   In a Chapter 13 Business Bankruptcy the automatic stay also protects co debtor. 

At The Law Offices of R.J.Atkinson,LLC we represent both secured and unsecured Creditors in Business Bankruptcy proceedings in Houston, San Antonio, Austin, Dallas and throughout the State of Texas. Depending on the particular facts of a Bankruptcy filing either in Chapter 7 or Chapter 11 we may be able to assist in maximizing the recovery of your potential claim and protect your rights as a Texas Business Bankruptcy Creditor. Please contact us for a free initial consultation regarding your potential claim as a Business Bankruptcy Creditor. Don’t wait until it’s too late.

If We Received Notice of a Bankruptcy Filing Doesn’t That Mean We’re Not Getting Paid?

All too often, when creditors receive notice of a bankruptcy filing, they automatically assume they have neither rights nor options with respect to their claim against the Debtor. If they are an unsecured creditor they often wrongly assume that they’re getting nothing. Sometimes even secured creditors don’t fully recover the maximum potential of their claims due to their failure to timely respond to objections or other proceedings. Whether a claim is secured or unsecured when a business debtor files for bankruptcy the creditors do have options available for responding to the bankruptcy filing. Since most creditors believe they will not be able to recover anything they just "give up" or cease to pursue the debts owed to them as soon as they discover a bankruptcy was filed. All it takes to determine if there is a likely potential recovery is a brief investigation of the particular facts of a case at the beginning of the case. This is all that is usually necessary to determine what can be done to preserve the creditor’s claim or debt owed by a Debtor. If a creditor takes positions early on to explore their options as a creditor in bankruptcy it is often a better recovery scenario as compared to simply doing nothing at all. Creditors outside of the State of Texas and even those with in house counsel will sometimes cease to pursue claims due to logistics or the expense involved to attempt recovery or have local representation. At The Law Offices Of R.J.Atkinson,LLC we are sensitive to those concerns and offer Business Bankruptcy Creditors whether inside or outside the State of Texas a free evaluation of their potential claim.

What Can Be Done for Our Company as a Texas Bankruptcy Creditor?

There are various approaches to protecting a Business Creditor’s Rights in Texas as well as in the Texas Bankruptcy Courts. In Chapter 7 Business Liquidation or Chapter 11 Business Reorganization proceedings The Law Offices Of R.J.Atkinson,LLC provides many services for Business Bankruptcy Creditors including;

  • Filing Proof of Claim
  • Creditor Meeting Representation and Attendance
  • Relief from the Automatic Stay
  • Objections to Discharge
  • Representation in Adversary Proceedings and Contested Matters
  • 2004 Examinations
  • Debtor-in-Possession Financing and Review
  • Prosecution and Defense of Preference Actions and Fraudulent Conveyances
  • Assumption and Rejection of Leases and Executory Contracts
  • Protection of Cash Collateral
  • The purchase and sale of businesses and assets in Bankruptcy
  • Assignments for the benefit of creditors
  • Representation of creditors’ committees and unsecured creditors in Chapter 11 Bankruptcy cases

As a Texas Business Bankruptcy Creditor you are Entitled to Certain Rights:

These rights under the United States Bankruptcy Code have certain limitations and are subject to the Bankruptcy Rules and Procedures. As Business Bankruptcy Creditor you have the right to;

  • File a Proof of Claim with the Bankruptcy Court evidencing your claim whether secured or unsecured; and
  • To question the debtor and their attorney at the §341 meeting of the creditors under oath about the schedules, assets, liabilities, the financial history as well as the financial future if applicable;
  • To further examine the debtor at a separate scheduled examination pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure.
  • To share in any distribution recovered or realized from the Bankruptcy Estate under Chapters 7, 11, 12, or 13 according to the priority of your claim;  
  • Object, dispute, or challenge how your claim may be treated in a plan or reorganization;
  • To be heard by the court in the matters concerning a debtor's plan (under Chapters 11, 12, and 13), as well as the liquidation of the debtor's non-exempt assets, which include payments from the assets of the estate;
  • Share any information with the United States Trustee, Examiner, or any other Trustee appointed to the case as to whether assets have been transferred, there are inaccuracies in the debtor’s schedules, or any other matter that may assist in the recovery of money for the Bankruptcy Estate and for the benefit of creditors;
  • To participate in a creditor’s committee if one should be appointed to closely monitor the progress of the case.

Do me or my Company Need a Lawyer as a Texas Bankruptcy Creditor?

No, but although it may seem as simple as filing a proof of claim and sitting back to see if you will be paid, its usually not that easy. There are various timelines or deadlines for certain actions in both Chapter 7 and Chapter 11 Bankruptcy. The failure to timely respond to objections to your proof of claim, to join or participate in a creditors committee, to examine the officers of the Debtor, or anything else pertinent that requires a timely response could result in your failure to be paid or recover your claim. You need an experienced attorney to make sure you meet these timelines and properly respond. Keep in mind that everyone involved in the Business Bankruptcy process is a lawyer or has an attorney representing them. The Judge is a lawyer and the Court has the US Trustee who is a lawyer, the Chapter 7 or Chapter 11 Trustee if involved is a lawyer or has a lawyer, the Debtor whether Chapter 7 or 11 has a lawyer and most all secured creditors have lawyers representing their interests. If you or your company’s claim is the only one without legal assistance, your potential recovery is likely to be at a huge disadvantage. You can be compelled or forced by the Debtor into accepting what you may be offered, which can be much less than you may be entitled to, or even receive nothing if you are not properly represented.

There are various methods for Business Bankruptcy Creditors to respond in a Chapter 7 or Chapter 11 Business Bankruptcy case. The best approach always depends upon the particular facts of a case. Business Bankruptcy Creditors should seek the advice of experienced counsel. At The Law Offices of R.J.Atkinson,LLC we represent both secured and unsecured Business Bankruptcy Creditors in Houston, San Antonio, Austin, Dallas, and throughout the State of Texas. We may be able to assist in maximizing the recovery of your potential claim if possible and protect your rights as a Business Bankruptcy Creditor. Please contact us at 800-436-9056 for a free initial consultation regarding your potential claim as a Business Bankruptcy Creditor or if you have questions about Creditor’s Rights in Texas Bankruptcy. There is no cost to evaluate your potential claim but don’t wait until it’s too late.


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